SUBJECT: Inthe exercise of the powers conferred upon him by

EXECUTIVE ORDER No. 07-01 Rev. 1
SUBJECT:
POLICY ON INDIRECT COST RECOVERY
THE SECRETARY GENERAL,
In the exercise of the powers conferred upon him by Articles 109 and 113 of the Charter
of the Organization of American States ("OAS") and Articles 4, 8, 12, 14 and 80 of the General
Standards to Govern the Operations of the General Secretariat of the Organization of American
States (hereinafter referred to as the "General Standards"); and,
CONSIDERING:
That, on May 23, 2007, the Permanent Council, through Resolution CP/RES. 919
(1597/07), approved ad referendum of the General Assembly, the amendment to Articles 78 and
80 of the General Standards in order to more clearly set out the policy of the General Secretariat
with regard to the recovery of direct and indirect costs for projects funded by Specific Funds and
Trust Funds entrusted to the General Secretariat;
That, on June 5, 2007, the General Assembly, through Resolution AG/RES. 2302
(XXXVII-O/07), approved the amendment of Articles 78 and 80 of the General Standards;
That, Article 80(c) of the General Standards establishes that the budget for every project
of the General Secretariat funded all or in part by Specific Funds and Trust Funds shall include all
of the direct costs, as well as a line item for recovery of indirect costs, and it shall indicate their
source of financing;
That, Article 80(d) of the General Standards provides that the General Secretariat shall
establish the rate for the recovery of indirect costs for projects funded by Specific Funds and
Trust Funds, and it shall semi-annually inform the Permanent Council regarding the amount
recovered for indirect costs and their use by the General Secretariat;
That, it is necessary to have a uniform policy for the recovery of indirect costs throughout
the General Secretariat on the amount of indirect cost to be recovered pursuant to Article 80 of
the General Standards;
That, through Executive Order No. 05-11, the SecretaIY General established the Project
Evaluation Committee (hereinafter referred to as the "PEC") as the primary body entrusted with
the evaluation of the appropriateness and importance of all proposed projects in the General
Secretariat;
That, the General Secretariat is financed with multiple funding sources, requiring
efficiency, effective record-keeping, and a transparent environment that will earn the confidence
of its donors and staff members;
That, a uniform indirect cost recovery policy will provide, among others, the following
products and services: planning, monitoring, review and evaluation of projects; resource
mobilization services; financial management framework (e.g., financial manuals, handbooks,
guidelines, and training); staff recruitment; overall administrative functions of the General
Secretariat; legal and financial review of agreements; banking operations (e.g., receipt of funds,
check emission, bank reconciliations); financial reporting; external audit coordination and
representation; internal audits; setup and management of accounts; procurement of goods and
services; recording and processing of transactions; facilities and utilities; and general use office
equipment and supplies (e.g., networks), etc.;
That, a sound indirect cost-recovery (hereinafter referred to as "ICR") policy should
ensure transparency and reduce "cross-subsidization" among projects and funds;
That, it is necessary to coordinate the negotiation with donors and potential donors of the
Organization's ICR recovery rate through the Secretariat for Administration and Finance
(hereinafter sometimes referred to herein as "SAF"); and
That, well executed programs and the trust of the Member States and the international
community are essential elements to sustain and increase support for the mission of the General
Secretariat, as well as to meet the Organization's financing needs,
RESOLVES:
I.
Definitions. For purposes ofthis Executive Order, the following definitions are used:
A.
Direct Costs. Costs that can be attributed to a particular activity or project with a
high degree of accuracy.
B.
Indirect Costs. Costs that are incurred for a common purpose which cannot be
easily attributed to a particular activity or project.
II.
Indirect Cost Recovery Policy ("ICR").
To establish a uniform policy for ICR for contributions channeled through the General
Secretariat for all specific fund and trust fund projects based on the following criteria:
A.
Agreements with Member State governments: Shall include a minimum ICR rate
of eleven percent (11%). ICR shall be calculated based on the contribution amount in support of
the corresponding project;
B.
Agreements with non-Member State governments: Shall include a minimum
ICR rate of twelve percent (12%). ICR shall be calculated based on the contribution amount in
support of the corresponding project; and
C.
Agreements with other entities, organizations, and institutions: Shall include a
minimum ICR rate of twelve percent (12%). ICR shall be calculated based on the contribution
amount in support of the corresponding project.
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III.
ICR Coordination and Allocation
The Secretariat for Administration and Finance is tasked with coordination of the ICR
Policy and with allocation' of the ICR rate in accordance with Administrative Memoranda issued
from time to time by the Assistant Secretary for Administration and Finance after consultation
with relevant areas of the General Secretariat.
IV.
Exceptions
A.
The Secretary General may make exceptions to the minimum ICR rate for a
specific contribution. Prior to considering whether to make an exception, the Secretary General
will review documentation on the matter presented to him by the Secretariat for Administration
and Finance and by other relevant areas of the General Secretariat.
Exceptions shall be reported on a semi-annual basis to the Permanent Council.
B.
Contributions in support of the holding of an OAS General Assembly and/or in
support of the holding of an OAS Conference or Meeting co-financed by the Regular Fund are
not subject to the requirements of this Executive Order.
V.
Exemptions
The funds exempted by the requirements of this Executive Order are specified in Article
80(i) ofthe General Standards, which currently are as follows:
A.
Contributions by a Member State Government totaling no more than $20,000 in
the Organization's fiscal year to an ongoing activity;
B.
FONDEM (Inter-American Emergency Aid Fund);
C.
All Specific Funds and Trust Funds administered by the General Secretariat and
designated by CEPCIDI or the Permanent Council as Humanitarian Funds;
D.
The Capital Fund for OAS Fellowship, Scholarship, and Training Programs;
E.
The Leo S. Rowe Pan American Fund;
F.
The OAS Medical Benefits Trust Fund;
G.
The Rowe Memorial Benefit Fund;
H.
The OAS Retirement and Pension Fund;
I.
The OAS Tax Reimbursement Fund; and
1.
Other funds established for the financing of staff benefits as designated by the
Secretary General.
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VI.
Review of the ICR Policy established under this Executive Order
The General Secretariat, through the Project Evaluation Committee and the Secretariat
for Administration and Finance, will annually review the ICR Policy established under this
Executive Order. When necessary, revisions to the ICR Policy will be implemented.
VII.
Scope
A.
The ICR Policy established by this Executive Order shall not be applicable to
funds received by the General Secretariat prior to the entry into force of the General
Secretariat's ICR Policy.
B.
The ICR Policy established by this Executive Order is applicable to all grants and
agreements and all amendments to them that are signed and/or accepted by the General
Secretariat and to all contributions that are received by the General Secretariat after the entry into
force of this Executive Order. For purposes of this Article VII, the terms "agreement" and
"grant" include, for example, contribution agreements, grant agreements, donations, exchanges of
letters, amendments, and memoranda of understanding. The terms "agreement" and "grant" also
include those supplementary agreements and amendments to agreements and contributions in
existence as of the effective date of this Executive Order where the ICR rate was not established
in the underlying agreement, but was left to later negotiation between the parties.
VIII.
Repeals and Entry into Effect
A.
This Executive Order repeals and supersedes all executive orders and other
regulatory instruments of the General Secretariat and all other past and present norms which are
inconsistent with the terms ofthis Executive Order.
B.
This Executive Order shall enter into force on the date on which it is signed.
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lInsulza
Secretary General
Date: May 29, 2007
Revision No. l: December.tO, 2007
Original: English
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